Will Indonesia Recognize Bitcoin as a Means of Payment?

Startups such as Circle, Coinbase, BitPay, and Blockchain are some of the most popular companies in the world of bitcoin. But arguably, organizations and individuals who establish the core bitcoin backbone play a more important role in ensuring the integrity of the digital currency.

Bitcoin runs on a blockchain which is a decentralized, public ledger of almost all the transactions made on the network. But as per the recent development in the ongoing controversy of digital currency, Bank of Indonesia has shut down the platforms of bitcoin payments such as Toko Bitcoin and Bitbayer.

Both of the payment platforms ceased operations in response to the announcement that bitcoin will not be recognized, by the bank of Indonesia, as the payment mode. Even though the latest announcement by Indonesia’s central bank renders the cryptocurrency payment processor’s business model unviable, Indonesian bitcoin exchanges are still operating freely.

Bank of Indonesia Prompts Businesses to Restructure Their Operations

The announcement of central bank’s denial in recognizing the bitcoin as a legitimate payment mode has caused the closure of operating payment platforms. Ever since the announcement has been made, Bitbayer has announced the termination of its services by 1st November and also encouraged its clients to withdraw their funds by the end of this month.

Similarly, Toko Bitcoin has also ceased the bitcoin exchange it previously introduced for electricity vouchers and prepaid phone services.

Generally, there is a prevailing thought that closure of these bitcoin exchanges is the direct result of the Indonesia’s central bank intervention but the same was denied by Oscar Darmawan who is the CEO of bitcoin exchange PT Bitcoin Indonesia. Darmawan confirmed that they received no direct request from the central bank – Bank of Indonesia –to shut down the operations along with their websites.

Moreover, Darmawan also discussed the decision of Bitcoin Indonesia towards ceasing the operation of payment processors. He addressed the grey area of the central bank’s statement and said that Bitcoin Indonesia will comply with all applicable regulations.

This shouldn’t come as a surprise since Darmawan says that he meets with the Financial Services Authority of Indonesia almost regularly in order to ensure regulatory compliance.

As bitcoin or the digital currency is the most controversial phenomenon worldwide, many countries are voicing their reservations about the usage of cryptocurrency. While many banks in the UK have denied opening the accounts of institutions involved in the trading of cryptocurrency, other countries are keeping strict rules to keep the growing financial mechanism in control.

Hence, the actions that are being taken by Indonesia’s financial institutions are no different. There are many countries that do not accept virtual currency or bitcoin as the valid and legitimate mode of payment.

While some countries take bitcoin as a threat to the establishment, others consider its usage as the means of trading illicit goods by many fraudsters and criminals around the world. But no matter how one perceives the new digital currency, the trend of bitcoin does not seem to go down any soon.